Chart of the Day: Portfolio's American Express 'Membership' Has Its Privileges
The stock has been in a steady move up since late summer, and here's what we see ahead.
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We added American Express AXP recently to our portfolio, another credit card name like Mastercard MA, which has been in Pro Portfolio for years and is one of favorite names.
Why a second credit card? AXP is quite different and obviously adds a bigger travel element to its earnings power. The fees are much larger as well and provide a nice moat, reliable earnings power for the company in good times and bad.
The chart shows a very strong, bullish trend. Higher highs, higher lows is our textbook definition of an uptrend. Take a look at the second pane to see the Moving Average Convergence Divergence coming down and crossing over. This is simply reflecting AXP building a base, the momentum having been lost for now. We also see that in the Stochastics, in the second pane to the bottom, which actually have turned back up.
But the big picture is bullish. The candles at the top of the chart have been blue (bullish) and teal (cautiously bullish) for months, which leads us to believe the stock trend can continue.
Lastly, volume trends have been bullish for months, as big institutions continue to buy the stock. Warren Buffett is one of the biggest shareholders of AXP.
We like American Express and rate it a "two" (stockpile on pullbacks) in the Pro Portfolio.
AXP is a holding in the Pro Portfolio.
